BoC cuts 25bps, signals room for more easing – BBH

FXStreet Insights Team FXStreet

The Bank of Canada’s more dovish policy stance relative to the Norges Bank supports the downtrend in CAD/NOK, BBH FX analysts report.

Labor weakness, softer inflation opяen door to further cuts

"Yesterday, the Bank of Canada (BOC) cut the policy rate 25bps to 2.50% (widely expected) after being on hold since April. The BOC noted “there was clear consensus to lower our policy rate” because Canada’s labor market has softened further, upward pressures on underlying inflation have diminished, and there is less upside risk to future inflation."

"That suggests more easing is in the pipeline if Canada’s labor market shows ongoing weakness. The swaps market is pricing 80% odds of an additional 25bps cut by year-end to 2.25% and some odds of another 25bps reduction to a low of 2.00% over the next 12 months."

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